LOOKING FOR A BUSINESS CREDIT LINE? ABL DOES THAT!
ASSET BASED LENDING / ASSET BASED LOAN CREDIT FACILITY
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Business lines of credit in Canada. Accessing this type of borrowing facility continues to remain both a goal and a challenge by many businesses of all types and revenue sizes. Let's examine the ABL facility as it compares to Canadian chartered bank credit facilities. They are similar... and they are different.
ABL MARRIES ASSETS AND CASH FLOW
In many cases, we maintain asset based lines of credit are the perfect marriage of assets and cash flow. The Canadian business owner and financial manager is always looking for facts and proper comparison when it comes to making a balanced decision on where the weight of evidence lies on access to working capital credit lines.
They want to know what the issues are, what key technical points must be considered. Additionally, they want to know what key issues are and where to go to find the answers. Just common sense.
Let's employ somewhat of a rapid-fire method of explaining what we mean. Let's dig in.
ABL IS NON BANK FINANCING
The ABL facility is (usually) a non-bank way of financing your business line of credit. It allows you to borrow, under one credit line, against all your asses on an ongoing basis. Major assets financed under the credit line include accounts receivable , inventories, fixed assets, and real estate if that applies.
THE GROWTH OF ASSET BASED LENDING IN CANADA
Asset-based credit lines in Canada are getting more popular every day. They are used by some of the largest corporations in Canada and start-up and emerging companies in all sectors of the economy. They are positioned as a borrowing alternative to the Canadian chartered bank credit line.
If there are two principal advantages of the asset based credit line it is that it substantially increases your borrowing power, and does not come with the ties that bind when it comes to qualifying for a bank credit line.
EVERY COMPANY IN EVERY INDUSTRY CAN ACCESS AN ASSET BASED LOAN / LINE OF CREDIT
Public and private companies can access the ABL facility, the borrowing criteria, i.e. your assets, remains the same. In all scenarios, a ' borrowing base ' is established, usually monthly, and your firm draws down on those margins.
ABL IS ' BORROWING POWER '!
How is borrowing power increased by this method of financing? Easy to explain. Accounts receivable are traditionally margined at 90%, and inventory can be margined anywhere from 25-75%. When you ‘throw in’ the other business assets under the same facility we have easily seen clients achieve 50-100% more borrowing almost immediately. In some cases more!
REPORTING REQUIREMENTS
Monthly reporting is more stringent under the ABL. While a bank typically might request quarterly or annual financial statements the asset based borrower must be prepared to send in monthly receivables, payables, inventory lists, and a balance sheet and income statement. That's a minimum! Over time we have observed this makes the business owner/manager more financially astute, as he or she tends to understand their business better.
CONCLUSION
Does your firm have a challenge in accessing working capital via a proper line of credit that suits your needs? If it does consider business lines of credit that come under an ABL facilities. Why? It works, more companies are doing it every day, and you just might find your competitors are talking about ' the new you ' when it comes to sales and revenue growth, vendor reputation. etc. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your credit line needs.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
7 Park Avenue Financial/Copyright/2020/Rights Reserved
